Procurement and commissioning of services fraud is a term used to describe pre-tender activity, the commissioning process, post-tender activity and mandate fraud.
Following the pandemic procurement spend decreased due to a reduction in rental costs because of the implementation of International Financial Reporting Standard (IFRS) 16, and lower spend on the COVID-19 response compared to 2021 – 2022. Thus, resulting in a decrease in cumulative financial vulnerability to fraud.
£388.3m
vulnerable from an expenditure of £34.1 billion
Those in decision-making positions within the procurement process, such as during the pre-tender phase, could become susceptible to bribery and corruption from commercial entities. This could ensue through favouring one supplier using single tender waivers, failing to declare a conflict of interest, contract splitting, and falsifying quotes and tenders. Such behaviour could be enabled through the introduction of the Provider Selection Regime (PSR).
It is a realistic possibility that inappropriate and fraudulent practices within both tender phases are enabled through a closed decision-making process which can be an exclusive environment. This is believed to reduce oversight and provide very few opportunities for suspicious behaviour to be witnessed and reported on.
Pre-tender fraud can also exist by contractors colluding and manipulating the bidding process through a variety of practices, such as bid rotation, bid suppression, and kickbacks. This results in the NHS paying more than necessary or receiving lower quality products and services. However, this type of collusion occurs outside of the NHS so there will be few opportunities for suspicious behaviour to be witnessed and reported on by the NHS or members of the public.
Exceeding procurement threshold limits and purchasing off framework, whether disaggregate spend, or purchase order spend is possible. A lack of oversight and contract management is believed to enable spend to exceed the threshold.
The threat of payment diversion fraud, or mandate fraud, remains prominent with continued reporting of incidents. Instances of cyber enabled fraud, such as phishing email communications purporting to be from NHS staff and suppliers to change bank account details, the hacking of supplier email accounts or the spoofing of genuine email addresses, are all used by criminals to divert genuine payments or falsify payments. However, the collaborative and proactive activity from an NHSCFA project resulted in the prevention of NHS funds ending up in the hands of fraudsters due to mandate fraud.
Post-tender fraud extends to unsolicited requests where criminals use office supply scams to contact NHS organisations. This type of fraud occurs via false invoices, phishing emails, and telephone calls.
The threat of commissioning of services fraud remains likely, especially due to the necessity for NHS organisations to provide sufficient staffing levels through the procurement of agency staff. There may be ongoing collusion between employment agencies and non-framework agencies to fill vacant shifts and charge a significantly inflated rate. Fraud may extend to agencies sending staff into the NHS who are inadequately trained, under qualified, or who lack specialist knowledge for the role.
Despite price caps in place, there is still flexibility for trusts to take the ‘break glass’ option and procure off-framework for agency staff as the NHS will prioritise patient safety over cost. As such, there may be ongoing collusion to fill vacant shifts and charge the NHS a significantly inflated rate.
Information reports received for procurement and commissioning of services fraud
The change in the number of fraud reports received in relation to procurement and commissioning fraud from 2019 - 2020 to 2023 - 2024 is illustrated in the chart below:
| 2019 - 2020 | 2020 - 2021 | 2021 - 2022 | 2022 - 2023 | 2023 - 2024 |
|---|---|---|---|---|
| 2019 - 2020378 | 2020 - 2021528 | 2021 - 20221,210 | 2022 - 2023648 | 2023 - 2024723 |
Horizon scanning
The 2023 - 2024 financial year was the first to see the potential impact of Integrated Care Boards (ICBs) through the implementation of the Health and Care Act in July 2022. In encouraging collaboration and moving away from competition and silo working, the new structure of the ICBs could increase the potential for abuse of positions and collusion within procurement. Also, the New Hospital Programme (NHP) may provide opportunities for further pre-tender procurement fraud.
The new Procurement Act 2023 and Provider Selection Regime (PSR) will change the landscape of procurement and commissioning within the NHS. Additionally, the NHS Supply Chain bringing more procurement responsibility in-house should leave fewer products managed by outside organisations on behalf of the NHS. This could also result in a reduced financial vulnerability from a fraud and error perspective.